-NEWS-

IMF sale to India helps gold leap to new all-time highs.

03 November 2009

Gold futures hit a new closing high after India’s central bank said it would purchase 200 metric tons of bullion and the dollar, while higher, trimmed its gains. India’s appetite for gold reserves pushed gold higher in European trading and underpinned its advance during the New York session. The early advance helped gold break out of a technical range that has capped action in the past month.

The sale alleviated past worries among traders on how the IMF might carry out its planned sales of 403.3 metric tons without adversely affecting gold prices. “Number one, that takes a lot of potential supply off the market,” said Peter Schiff, president of Euro Pacific Capital. “India is not buying that gold to sell it. It’s buying that gold to own it and keep it.” In addition, it shows there is tremendous demand on the part of central banks to increase their gold reserves.

It was “the biggest single central-bank purchase that we know about for at least 30 years in such a short period,” said Timothy Green, the author of “The Ages of Gold.” Central banks, the biggest holders of gold, may diversify out of the dollar and buy bullion as ballooning U.S. debt and low interest rates weaken the currency. “It is but a matter of time until China and the IMF announce much of the same,” said Dennis Gartman, an economist and the editor of the Gartman Letter.

“To see a central bank buy at this kind of level shows there are going to be a lot of other buyers out there,” said David Beahm, vice president of economic research at Blanchard & Co. India, along with China and Russia, had indicated interest in buying gold as a way to diversify their holdings in dollar-denominated assets. Gold rose even as the dollar moved higher against other major currencies in early trading, breaking away from its traditional inverse relationship with the U.S. currency.

The dollar hit a one-month high against a basket of currencies on Tuesday as investors retreated from risk assets before paring those gains. Gold’s sharp rally in spite of a dollar rise showed that strong demand will continue support the metal. The purchase by the Reserve Bank of India underscored gold’s increasing status as an official reserve.

Risk aversion weighs on gold futures

27 October 2009

Gold ended lower as the U.S. dollar advanced on fresh worries about the financial sector. On the heels of the U.S. government’s closure of seven failing banks Friday, stock analyst Dick Bove downgraded several major bank stocks and research analysts at ISI Group said Congress probably won’t extend the tax credit for first-time homebuyers. The dollar had fallen earlier after a Chinese central-bank researcher called for moving some of the country’s massive foreign reserves into euro and yen holdings.

The dollar bounced off 14-month lows against the euro, trading up on the day after riskier assets such as U.S. stocks fell. While falls in stock markets usually boost gold’s safe haven appeal, they have recently sent investors running for the perceived safe haven of the dollar over that of gold. “The relationship between gold and the dollar on a daily basis is still very strong,” said Daniel Major, analyst at RBS Global Banking and Markets. “Since gold broke above $1,000 it has outperformed the euro/dollar slightly, i.e. it moved up faster than the dollar devalued, but for the last week or so it seems to be consolidating.”

The strengthening dollar choked off an early advance in gold, oil and other commodities, sending futures prices tumbling. Analysts said the increase in the dollar gave investors an excuse to take some profits. Adam Klopfenstein, senior market strategist at futures brokerage Lind-Waldock, called Monday’s trading a “healthy correction.” “There is going to be profit-taking that goes along with these moves and the profit-taking will be enhanced the higher these prices get.”.

Gold leaps to new all-time high on concerns about dollar

08 October 2009

Gold finished at a new record closing level, after earlier hitting a record intraday high of $1,045 an ounce, as the dollar slumped on a report suggesting the end of dollar-based oil trading. According to Peter Spina, chief investment analyst at GoldSeek.com, trading gold and other currencies in exchange for oil would “establish gold as a recognized medium of exchange, returning it a step closer to its role as money on a world trade system.”

Analysts called a U.K. newspaper story suggesting that Gulf states are considering a basket of currencies for the oil trade a “spark” or “gasoline on a fire” giving gold the impetus to hit record highs Tuesday. The report – although denied by several countries, including Saudi Arabia – undercut the dollar and thereby supported gold. Brian Dolan, chief currency strategist for FOREX.com, noted that the dollar was already weakening early in the week after Group of Seven officials didn’t issue any kind of statement supporting the dollar.

Gold’s advance was stoked by a tumbling dollar, which hit a 14-month low against the Australian currency after Australia became the first major country to raise interest rates since the onset of the financial crisis. “I think the case for gold is pretty bulletproof right now,” said Joe Foster, portfolio manager of the Van Eck International Investors Gold Fund. “Given that we’re at new highs now, I think the next target the market will be looking at is $1,100.”

“Gold is acting like the ultimate currency,” said Chip Hanlon, the president of Delta Global Advisors Inc. in Huntington Beach, California. “Central banks are following the same monetary course and trying to stimulate and inflate their way back to growth. Everyone’s concerned about the dollar, but it’s not like you can hate the dollar and fall in love with the euro or the yen.” Hanlon said prices may reach $1,400 within six months.

Gold bounds higher after G7 offers NO support for dollar!

05 October 2009

Gold futures closed sharply higher when gains inspired mostly by a weak dollar triggered chart-based buying. “It really accelerated when technical buying came in when we took out last week’s high. That was a natural setting for stops,” said Charles Nedoss, senior account manager and metals analyst with Peak Trading Group.The dollar fell after a meeting of G7 finance ministers in Istanbul brought no surprises, which the market took as a sign policy-makers are comfortable with a gradual dollar decline as part of global economic rebalancing. Global stocks also climbed, extending gains after data showed the U.S. Institute of Supply Managers’ services index rose more than expected last month.It was the first time since August 2008 that the service index logged a reading above 50, which indicates growth. Monday’s news reinvigorated the market, luring investors back into economically sensitive assets and leading to a sell-off of the dollar. The gains in stocks and the decline in the dollar helped push oil prices back above $70.

The greenback fell as much as 0.5 percent against a basket of six major currencies. “Gold is finding support out of dollar weakness,” said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. “Hard breaks have found nothing but buying. Gold is building stamina to take out the old record.”

The COMEX December gold futures contract closed up $13.50 Monday at $1017.80, trading between $1001.60 and $1018.90

IMF to sell 403 tonnes of gold to boost lending to poor

20 September 2009

The International Monetary Fund said its executive board approved Friday the sale of 403 tonnes of gold, worth an estimated 13 billion dollars, to boost its capacity to lend to poor countries.The IMF said in a statement the sales would be “in a volume strictly limited to 403.3 metric tonnes, with these sales to be conducted under modalities that safeguard against disruption of the gold market.”The IMF said the decision was a central element of a new income model for the institution that had been approved by the executive board in April 2008.The Group of 20 developed and developing countries decided at their April summit in London that the money raised by the gold sales should allow the IMF to offer favorable conditions on loans to the poorest countries.“The new income model is designed to provide the fund with more diverse income sources that are better aligned with the variety of functions performed by the fund, with a central component being the funding of an endowment with the profits from these limited gold sales,” the 186-nation institution said.

The IMF said that gold sales “will also increase the fund’s resources for lending to low-income countries,” a strategy that won board backing in July.

The amount of gold is one-eighth of the current holdings of the Washington-based IMF, one of the world’s biggest holders of the precious metal.

“I am delighted that the executive board has given its overwhelming backing to a strictly limited sale of fund gold to put the financing of the IMF on a sound long-term footing, and enable us to step up much-needed concessional lending to the poorest countries,” IMF managing director Dominique Strauss-Kahn said in the statement.

“These sales will be conducted in a responsible and transparent manner that avoids disruption of the gold market,” he said.

The fund is required by its Articles of Agreement to conduct all gold sales at market prices, including direct sales to official holders.

The IMF did not state the value of the gold to be sold but based on the current bullish market price for the metal, it is estimated the sale would fetch 13 billion dollars.

Under the approved plan, the IMF would offer to sell gold directly to central banks “or other official sector holders if there were to be interest from such holders.”

The IMF said such transactions would redistribute official gold holdings without changing total official holdings.

If the public sector demand is insufficient, the IMF said it could conduct the gold sales “on-market in a phased manner over time,” in line with an approach already followed by central banks.

The IMF would be constrained by the overall ceilings agreed by the central banks, which currently is 400 tonnes annually and 2,000 tonnes in total over the next five years starting on September 27.

The IMF said it “will inform markets before any on-market sales commence” and “report regularly to the public on the progress with the gold sales.”

In July, with the world economy struggling to pull out of the worst recession in six decades, the IMF announced it would increase its lending to poor countries to 17 billion dollars by 2014, including 8.0 billion in the coming two years.

That compares with an annual average of one billion dollars in the 2006-2008 period, and three billion dollars in the first half of 2009.

The IMF also had decided to cancel interest payments owed by poor countries through end-2011 and reform lending practices to make loans quickly available, at higher ceilings on amounts and with more flexible conditions.

Gold eases back toward $1000 as dollar strengthens

14 September 2009

Gold futures fell slightly under pressure from a stronger dollar but managed a close above $1,000 an ounce. The greenback was benefiting from safe-haven buying in light of the U.S.-China trade spat, said Jim Steel, senior vice president and metals analyst with HSBC. Although gold isn’t necessarily also benefiting from this safety buying, he said ongoing momentum buying with the market around $1,000 is supporting the metal.

The dollar index rose to a high of 77.08 as concerns about a trade war between China and the U.S. encouraged safe-haven demand in the dollar and pressured commodities. However, the dollar lost some steam, with the index recently at 76.678, as U.S. equities markets took the trade spat in stride. Over the weekend, Washington imposed stiff tariffs on Chinese-made tires, and China said it would launch an anti-dumping investigation into U.S. sales of chicken and auto products.

Gold fell from an 18-month high on speculation that investors may begin selling out of long positions, which climbed to a record last week, and the dollar strengthened, halting a six-session slide. “This week will be crucial in determining whether speculators can keep gold prices underpinned without the temptation to book profits,” Andrey Kryuchenkov, a VTB Capital analyst in London, wrote today in a note. “A reversal in the dollar sell-off trend would see severe profit-taking and intensive unwinding in speculative gold positions.”

Gold rests on profit taking before holiday

04 September 2009

Gold prices were largely unchanged after the Labor Department reported the smallest decline in U.S. nonfarm payrolls in a year in August. Still, the unemployment rate jumped to a 26-year high of 9.7 percent. “Gold is holding its own,” said Calyon analyst Robin Bhar. “The data is not bullish or bearish for gold, it is probably neutral. But we have had a good run, we have gained $40 in three days, so people are taking some money off the table.”

The slight retreat in gold prices was expected after such a big advance, which took gold near the $1,000 mark for the first time since February. The jump in gold this week was supported by a weaker dollar and a growing appetite for safe-haven assets. Investors have begun to question whether their bets on an economic recovery that drove a six-month rally in stocks were sound, and they have been padding their portfolios with more gold as a precaution.

Gold pared profit-taking losses Friday as the U.S. dollar weakened. After gold closed, the ICE Futures U.S. dollar index was down more than 0.46%. Participants didn’t want to aggressively place bearish, or short, trades before the three-day U.S. Labor Day holiday weekend, said Sterling Smith, market analyst at Country Hedging. He said volume was thin in gold all day, and thinned more during the later part of the session.

Despite Friday’s small loss, gold futures marked their best week in more than four months, largely due to gains in the previous two sessions. Holdings in the biggest gold exchange-traded fund rose the most in three months on Thursday. “Over the last few days gold has begun to trade as an asset class of its own,” said Brian Kelly, chief executive officer of Kanundrum Research, a commodities and macroeconomic research firm.

Gold slightly higher in trading before Federal reserve statement.

13 August 2009

Gold futures finished modestly higher on support from a weaker dollar and higher equities. Shortly after gold closed, the ICE Futures U.S. dollar index was down more than 0.5% while the Dow Jones Industrial Average was up 139.36 points. Trading was subdued ahead of the Federal Reserve’s interest rate announcement, said Sterling Smith, CTA and market analyst with Country Hedging.

The dollar fell as much as 0.7 percent against a basket of six major currencies before easing losses after the Federal Reserve outlined plans to slow purchases of $300 billion in Treasury debt. Bullion, which often falls when the dollar strengthens, pared gains. Gold’s “near-term direction is likely to depend on the reaction to the Fed statement and whether the statement bolsters risk appetite or prompts a reduction in exposure,” James Moore, an analyst said.

Gold ended Wednesday’s floor trading higher but turned lower in after-hour electronic trading after the Federal Reserve said it will slow the pace of its Treasury purchases, reducing worries about inflation. “There’s nothing unexpected in the Fed’s statement,” said George Gero, a precious-metals trader for RBC Capital Markets. “A small trading range seems likely as [the] dog days of summer are here and momentum traders have pulled back awaiting news.”

Why Gold is due for a “Spectacular Rally”

19 July 2009 – By Ian Cooper

There’s always a bull market somewhere. . .

Right now could be the most profitable time to be a gold investor, according to Brian Hicks, publisher of Wealth Daily.

Sure, in recent months, gold was back around $1,000 an ounce and got shot down.

But we think we’ll see $1,000 again. Heck, we could even see $1,500 to $1,600 on consideration of a second stimulus and growing, unsustainable debt, to which dollar flooding has become the only solution.

Mark these words: now is the opportune time to buy gold.

It’s virtually begging to be bought, as we enter the third and final stage of the correction in gold stocks. We’re talking about the potential to see a 1970s-style final stage 750% run in gold.

Gold Prices Are Due for a Prolonged Rally as the Recession Deepens

So says Peter Schiff, the financial guru who (along with us) predicted the subprime meltdown and ensuing recession. “If you really want to grow your wealth, you should own gold in the mining sector. With gold stocks, there’s obviously a lot of leverage to higher gold prices,” he says.

“With gold stocks, there’s obviously a lot of leverage to higher gold prices. As millions or billions of people discover gold as a store of value and as a way to escape inflation, there’s going to be tremendous demand and somebody’s going to have to supply that demand. It’s obviously going to have to be mined,” he says. “So the companies that have gold and mine it are going to see profit margins explode.”

And the scenario will likely be strengthened, as strong demand outweighs global output. In fact, world gold production has declined since peaking in 2001, despite gold’s $600 rise.

Gold eases higher as U.S. economic data raises inflation concerns

15 July 2009 – August gold futures added to the prior day’s rise after data showed the U.S. Producer Price Index rose to 1.8% in June. The run higher came “despite significant gains in equities, indicating gold does not act as a safe haven at present, but is primarily driven by U.S. dollar movements. The latter came under pressure again, as improving equities drove risk aversion down, which in turn provided support for gold,” said Barbara Lambrecht, an analyst at Commerzbank.

Gold advanced as rising U.S. retail sales brightened the economic outlook, boosting demand for bullion as an alternative investment and a hedge against inflation. “Gold is higher on risk appetite and on technical support sparked by the market’s failure to follow through with last week’s break of the $915 level,” said Tom Pawlicki, an MF Global Inc. analyst in Chicago.

The consensus-beating rise in the U.S. PPI, twice as big as expected, is also reigniting fears over rising inflation. “(Gold) fell last week on commodities liquidation, but held above $900, which is good,” said Simon Weeks, head of precious metals. “Now buyers are back as they focus on an alternative to currencies.”

Gold, oil down as dollar rises

30 June 2009 – The combination of dollar strength plus month- and quarter-end long liquidation sent gold futures sharply lower Tuesday. “A lot of it is dollar-related,” said Frank Cholly, senior market strategist with Lind-Waldock. “We saw a key reversal in the dollar.” The end of the month and quarter were also key influences in gold’s decline, said Frank Lesh, broker and futures analyst with FuturePath Trading. Funds are liquidating to capture profits in not only gold but a wide range of commodities. “Commodities in general are taking a bit of a beating today,” he said. “Crude oil has given back all of its gains from yesterday.” August crude oil was down $2.42 to $69.07.

August gold futures fell $13.30, or 1.4%, to close at $927.40 on the Comex division of the New York Mercantile Exchange. For the quarter, gold rose 0.5%, which would put its gain in the first half of 2009 at 4.9%. “Over the last month gold has suffered from a renewed appetite for risk,” said Brian Kelly, chief executive of Kanundrum Research, a commodities and macroeconomic research firm. “The market is also adjusting to new inflationary expectations.” In currency trading, the dollar was higher against most of its major counterparts, with the dollar index (DXY 80.17, +0.33, +0.42%) topping 80. Helping the greenback move higher, U.S. home prices were down 18.1% in the 12 months through April, according to the national Case-Shiller home price index. Meanwhile, U.S. consumer confidence retreated, falling to a reading of 49.3 for June as worries grew about jobs and the economy, the Conference Board reported.

Bullion ended the second quarter less than $10 above its first-quarter close, as signs of global economic stability offset demand for gold as a hedge against long-term inflation. Zachary Oxman, managing director with California-based TrendMax Futures, said investors took profits on the last day of the quarter following a period of solid gains across the commodities group. “What you are going to see is a selloff in commodities, and gold is going to be dragged down by it. It’s nothing fundamental about the gold market itself,” Mr. Oxman said. The precious metal reversed gains when the dollar, which has been under pressure, gained after an unexpected drop in U.S. consumer confidence data. “Obviously, in these days where everything is linked together, from crude prices to the price of gold, any change to people’s view of the economy and inflation expectations will cause a reaction,” said Ole Hansen, an analyst at Standard Bank. Matthew Turner, an analyst at VM Group, said gold investors seemed to be focusing more intently on long-term inflation expectations than recession fears, which would strengthen the link between crude and bullion prices. “But there are no immediate signs of inflation anywhere for now, so investors are looking to the long term, and of course when inflation does start to go up, the price of gold will be rising well ahead of it,” he said.

27 June 2009 – Gold futures managed a small gain Friday, boosted by the softer tone in the U.S. dollar but backing down from the session highs on profit-taking ahead of the weekend. August gold rose $1.50 to settle at $941 on the Comex division of the New York Mercantile Exchange. Shortly before gold closed, the dollar index was down 0.750 point to 79.940, which tends to underpin gold. Still, gold backed down from its strongest levels even as the dollar remained on the defensive. “It looks like some profit-taking after prices headed higher from the middle of the week,” said Carlos Sanchez, associate director of research with CPM Group. The initial rise occurred on a day when the U.S. dollar weakened partly in response to comments from the People’s Bank of China saying it will push for reform of the international currency system to make it more diversified and reduce over-reliance on the current reserve currencies, primarily the dollar. This particularly caught the eye of gold traders a day after a senior economic researcher in the Communist Party expressed concern about the dollar and said gold could be a better alternative.

Gold could receive a shot in the arm as China and some other central banks recently indicated they would consider to diversify their reserves into a basket of major currencies out of the dollar. However, market watchers said it was unlikely that the dollar’s world reserve currency status would be challenged in the foreseeable future. The price of gold has largely moved in a broad range between $920 and $940 this week, as the combination of the resurgent dollar and easing inflation worries put a damper on bullion’s rise. Analysts said that the recent encouraging U.S. data had hampered gold’s rise, as the danger of fresh crises in financial markets appeared less imminent. For next week, the metal should see less liquidity and more short-term volatility because of thinner volume related to the U.S. Independence Day and Canada Day holidays, said George Gero, vice president of RBC Capital Markets Global Futures.

Gold flat while dollar and oil both down

19 June 2009 – Gold futures finished slightly mixed Friday while continuing their recent consolidation on a day when the dollar and crude oil both fell, sending the metal conflicting signals. Gold has been confined to a range of less than $20 over the past five trading days – much less than volatility in months past when moves of more than $20 sometimes occurred in a single day. “I see a tug-of-war,” said George Gero, vice president with RBC Capital Markets Global Futures. “We’re not making headway up or down.” He cited offsetting factors. For instance, as gold was closing, the dollar index was down 0.488 point to 80.121. This tends to support gold. However, crude oil was down $1.03 to $70.34 a barrel after earlier being as high as $72.30. Falls in this commodity often pressure others, including gold.

Gold futures ended a tad higher on Friday, but tamed inflation worries and the dollar’s recent strength could limit the metal to a narrow trading range ahead of a U.S. Federal Reserve meeting next week. U.S. August gold futures settled up $1.60 at $936.20 on the COMEX division of the New York Mercantile Exchange. “If you are looking at the ups and downs of gold in its narrow trading range, it is more or less a reflection of the swings in the euro/dollar exchange rate,” said Peter Fertig, a consultant at Quantitative Commodity Research in Germany. Meanwhile, the gold market shook off news that the U.S. Senate on Thursday approved a bill that supports a planned sale of 400 tonnes (12.97 million ounces) of gold by the International Monetary Fund. U.S. congressional approval is needed before the U.S. representative on the IMF’s board can support the sale of the gold. Market watchers expect the gold sale would be gradual and could be incorporated into the Central Bank Gold Sale agreement to minimize interruption in the open market. Traders will now focus on a two-day policy and interest-setting meeting by the Federal Reserve next week.

Gold trades sideways as dollar steady

19 June 2009 – Gold futures meandered sideways Thursday before finishing modestly lower. The metals are largely consolidating at the moment as the dollar does likewise, said traders and analysts. As of gold’s close, the dollar index was higher but essentially sideways as the high and low for the session were contained within Wednesday’s trading range. “It seems like we do have physical demand [in gold] on dips,” said Dave Meger, senior metals analyst at Alaron Trading. But otherwise, demand has not been particularly strong since the market is in the “summer doldrums.” Gold seems to be awaiting a fresh catalyst, whether it be a big move in either equities or the foreign-exchange market, observers said. The metal may well get a bounce if the stock market should reverse back lower again, which could lead to renewed flight-to-safety buying in gold.

Precious metals like gold were little changed as the dollar held fairly steady. Investors have been moving into commodities in recent weeks amid a steady decline in the dollar. But with such small moves in the U.S. currency Thursday, investors had little reason to buy. On Thursday, the euro traded at $1.3970, up from $1.3960 late Wednesday in New York. “We’re not seeing any real impetus from the dollar,” said Dave Meger, a gold analyst at Alaron. “We have seen physical demand but just not enough to drive the market higher.” On the New York Mercantile Exchange, gold for August delivery slipped $1.40 to settle at $934.60. Oil prices added 34 cents to settle at $71.37 a barrel.

In Iran, the second-largest oil producer in the Organization of Petroleum Exporting Countries, former Prime Minister Mir Hossein Mousavi joined a rally in Tehran today to protest his defeat in a disputed presidential election on June 12, state-run Press TV said. Oil prices “will hold up heading into the weekend in light of the very unsettled Iranian situation,” Edward Meir, an MF Global Ltd. analyst in Darien, Connecticut, said in a report. “The next shoe to drop would be for the opposition to call for national strikes. In such a case, oil prices would be much more responsive to the upside, and we could see spillover strength in metals as well.” Some investors buy precious metals as a store of value at times of political instability, or as a hedge against inflation when the dollar falls and oil gains.

Gold, oil down as dollar rises before G8 meeting.

15 June 2009 – Fund selling moved gold futures sharply lower Friday as the U.S. dollar advanced. With the strength in the dollar, profit-taking ahead of the weekend was pressuring the metal, said Frank Lesh, broker and futures analyst with FuturePath Trading. The dollar rose after European Central Bank President Jean-Claude Trichet said the economic situation is still difficult and unpredictable. Those comments came shortly after data showing euro-zone industrial production slumped to a fresh low for the year in April. The dollar also found support from comments published Friday by Japanese Finance Minister Kaoru Yosano, who told Bloomberg News his government firmly supports U.S. policies and the soundness of the country’s debt.

The U.S. Dollar Index, a six-currency gauge of the greenback’s value, rose as much as 1.4 percent after Japanese Finance Minister Kaoru Yosano said his nation’s confidence in U.S. debt is “unshakable.” In a June 10 interview, Yosano also said the dollar’s status as the world’s reserve currency isn’t threatened. The dollar’s rise “put a little bit of pressure on gold,” Bernard Sin, the head of currency and metals trading at Swiss refiner MKS Finance SA, said by telephone from Geneva. “The dollar may rebound in the short term, but longer term, it’s going to continue to weaken.” Some investors buy gold as a store of value in times of heightened international tensions and sell the metal when those tensions ease. In Iran, voters went to polls today as President Mahmoud Ahmadinejad sought a second term, touting accomplishments including advancing the country’s nuclear and aerospace technologies. Those steps have raised concerns in the West that Iran is developing atomic weapons and long-range missiles capable of reaching Israel and parts of Europe. “Pressure may also be coming from early news that a moderate candidate” may win, Tom Pawlicki, an MF Global analyst in Chicago, said by e-mail. “Such news would be bearish for gold.”

U.S. August futures settled down $21.30, or 2.2 per cent, at $940.70 on the Comex division of the New York Mercantile Exchange. Crude oil took a breather to end about 1 per cent down at $72 per barrel, following solid gains earlier this week. Oil’s decline triggered across-the-board selling in commodities, with the Reuters/Jefferies CRB index down about 1.5 per cent. Gold has historically tracked oil prices, as it is often bought as a hedge against inflationary pressures sparked by higher crude. Looking forward, investors awaited possible market-moving news from a G8 finance ministers’ meeting in Lecce, Italy, over the weekend. Asset manager Fortis Investments told Reuters it favours gold as a longer-term play on both inflation and deflation. Gold is seen as an asset that holds its value in volatile times.

Gold and oil advance as weak-dollar theme continues.

12 June 2009 – Gold rose from a two-week low in New York and London on speculation that a slide in the dollar will spur demand for the precious metal as a currency alternative. The U.S. Dollar Index, which measures the currency against six others, including the euro and yen, fell as much as 1.4 percent. “Gold is now heading back up as the U.S. dollar is losing ground against the euro,” said Miguel Perez-Santalla, a sales vice president at Heraeus Precious Metals Management in New York. “Gold has reasons to rally,” said Stephen Platt, an Archer Financial Services Inc. commodity analyst in Chicago. “The dollar is pretty risky to be in.” The metal probably will trade at “$990 in a couple of weeks.” he said.

August gold rose $7.30 to settle at $962 on the Comex division of the New York Mercantile Exchange. Participants “can’t ignore the falling dollar anymore,” said Michael Gross, broker and futures analyst with OptionSellers.com. A weaker greenback tends to support dollar-denominated commodities by making them less expensive in other currencies, which can boost demand.

Most commodities, including gold and oil, finished higher Thursday as weakness in the dollar sent investors in search of a shelter from inflation. The dollar fell further against the euro and the British pound amid more evidence that the economy’s slide is abating. Oil prices marched higher on the Nymex, hitting an eight-month high amid the upbeat economic data. Light, sweet crude for July delivery rose $1.35 to $72.68 a barrel.

Over 75 analysts see $2,200/oz. average gold price ahead.

11 June 2009 – Gold prices touched $1,000/oz. in 2009 as stocks fell to decade lows and sent investors rushing to safe havens. The commodity super-cycle has swept gold prices up over threefold since 2001 — but that’s just the kickoff phase say the experts.

“$1,000/oz. gold signals the world is quickly losing confidence in paper currencies, the federal government and Wall Street,” says CEO Craig R. Smith.

How high will gold rush?

So far gold prices have systematically grown about $100/oz. per year between 2003 and 2008. Gold prices averaged $300 in ’03, $400 in ’04, $500 in ’05, $600 in ’06 and $700 in ’07 and $800 in ’08. But today many experts are forecasting $1,000-$1,500 gold prices in 2009 on their way north of $2,000/oz.

“Gold is poised for a dramatic surge and could blast through $2,000 an ounce by the end of 2009 as central banks flood the world’s monetary system with liquidity,” according to an internal client note from the US bank Citigroup.

“The damage caused by the financial excesses of the last quarter century was forcing the world’s authorities to take steps never tried before. This gamble was likely to end in one of two extreme ways: with either a resurgence of inflation; or a downward spiral into depression, civil disorder, and possibly wars. Both outcomes will cause a rush for gold,” reports London Telegraph.

“When greed is finally replaced by profound fear, ‘faith’ in fiat money will fail, and there will be a profound flight out of all paper and digital financial instruments, and into physical gold and silver. The reason we have not yet reached $2,000 gold is because this has not yet happened. When it does, $2,000 gold may well be the last legible signpost on a road that connects normalcy with financial chaos,” reports Paul Saur at Kitco.

South African gold output ‘to decline until year 2014.

10 June 2009 – A new study released today (June 9th) has suggested that gold production in South Africa will continue to decline until at least 2014, Mining Weekly reports.

The country was once the world’s largest producer of the yellow metal but slipped behind China in 2007 and is now third overall, having also been surpassed by the US.

It could only muster 220 tonnes of gold last year, a situation which was made worse by the impact of the power crisis suffered by state utility Eskom in January.

Now business research and consulting firm Frost & Sullivan has sounded a positive note for anyone with a Gold Investment by indicating that this trend is likely to continue.

Wonder Nyanjowa, a mining and metals analyst at the company, told the news provider: “The South African government’s renewed focus on mine safety, declining ore grades, electricity shortages, skills shortages, increased operating-cost pressures and a difficult labour environment will result in further production cuts.”

Such news is welcomed by those with an investment in the yellow metal as lower global supplies inevitably lead to a spike in demand and therefore higher Gold Prices.

A similarly positive, albeit broader outline for gold was offered last week by a group of analysts at leading North American financial services provider BMO Capital Markets.

“Gold, copper and oil should continue to be supported by better economic conditions, poor supply growth prospects over the long term and their appeal as a hedge,” they were quoted as saying by the Wall Street Journal.

Zimbabwe gold production slides by almost a half.

09 June 2009 – The Chamber of Mines has confirmed that gold production in Zimbabwe declined by 49 percent in 2008 as a result of the country’s difficult economic circumstances.

Official figures from the body show that output last year was 3,576 kg, in comparison to the figure of 7,017 kg reported in 2007.

David Murangari, president of the Chamber of Mines, explained that restrictive operating environments and a desperate lack of working capital contributed to the decline.

“The performance of the Zimbabwean mining industry in 2008 is best described as dismal and gloomy,” he said at the organisation’s annual general meeting.

“Most mines operated under extremely difficult macro-economic conditions for the first nine months of the year. Most importantly, there is dire need for recapitalisation of the industry.”

However, such falls in gold output are likely to be welcomed by anyone with a Gold Investment, as decreasing global supplies leads to higher demand and therefore higher Gold Prices.

Last week, Andrey Kryuchenkov, an analyst with London-based firm VTB Capital, also sounded a positive note for gold by explaining that dollar weakness and inflation fears should keep prices moving upwards.

“Most of the ongoing rally in the precious metal is more driven by a stark weakness in the US dollar than the risk averse buying we saw last winter,” he said in an interview with Bloomberg.

“Inflation concerns are gradually creeping onto the investor agenda.”

Stronger dollar weighs on gold futures.

05 June 2009 – Fund selling clipped gold futures Friday as stronger-than-expected payrolls data sapped their safe-haven allure and a muscular U.S. dollar pressured prices. The funds essentially were unwinding a “rash” of buying that came in recent sessions on dollar weakness, said Michael Gross, broker and futures analyst with OptionSellers.com. The funds were selling short, as well as liquidating some long positions, said George Gero, vice president with RBC Capital Markets Global Futures. “The payrolls data were not as bad as everybody expected,” he said. “That probably changed some portfolio managers’ minds about the time it would take the economy to recover.” Non-farm payrolls slid 345,000 in May, the U.S. Labor Department said Friday, well below the 525,000 decline economists had expected. “Down the road that will be inflationary, but that took some of the risk premium out of gold,” said Sterling Smith, vice president with FuturesOne. Last month’s payrolls drop was the smallest since September 2008, when the recession intensified in the wake of the collapse of Lehman Brothers.”

Gold futures for August delivery dropped $19.70, or 2 percent, to $962.60 on the New York Mercantile Exchange’s Comex division. The metal fell 1.8 percent this week. “We still think that gold prices are headed up toward $1,000 over the next one to two weeks, with support coming from inflows of investment and weakness in the dollar,” Tom Pawlicki, an analyst at MF Global in Chicago, said today. The dollar index, which fell to its lowest this year on June 2, has dropped 4 percent in the past month as gold futures gained 6.4 percent. “The dollar is the key driver at the moment,” David Barclay, a metals analyst at Standard Chartered Plc in London, said by phone today. “We’re not close to extreme inflation yet,” though “the dollar will be the main driver for gold for the rest of the year.” The dollar advanced the most against the euro since late March and rose to a three-week high versus the yen. “Gold is down on the back of a stronger dollar,” Anne-Laure Tremblay, an analyst at BNP Paribas, said. “Gold and precious metals as a class will do extremely well over the next couple of years,” Sean Darby, the chief Asia and emerging markets strategist at Nomura International Ltd., said today. “Debt forgiveness and debt restructuring will come secondary to the actual money printing by central banks.”

Dollar bounce yields cheaper gold.

03 June 2009 – Gold prices retreated Wednesday, falling 2 percent as the dollar rebounded against the euro and the British pound. The dollar’s gains came ahead of Thursday’s interest rate decisions from the European Central Bank and the Bank of England. Both are expected to keep their benchmark rates at historically low levels of 1 percent and 0.5 percent, respectively. While low interest rates can help energize an economy by making borrowing costs cheaper, they can also weaken a country’s currency. Stocks sold off sharply on Wednesday after data on factory orders and the services industry came in below expectations. Investors found little comfort in comments from Federal Reserve Chairman Ben Bernanke, who expressed concern over the country’s massive debt load. He told Congress that failing to ease the U.S. budget deficit could undermine efforts to restore the economy to health. Bernanke also played down the threat of inflation, saying the economy’s recovery is likely to be subdued, which should keep prices for goods and services in check. The dollar has taken a beating in recent weeks as optimism about the economy grows and investors flock to more risky assets like stocks. This has been a boon to gold, which is used as a hedge against inflation and a weak U.S. currency. Before Wednesday, the U.S. Dollar Index, which measures the dollar against a number of other major currencies, had fallen 12.1 percent since early March, when the stock market’s rally began. Conversely, gold was up 9.9 percent.

Gold and silver futures fell sharply Wednesday as the recent moves in a number of markets made an about-face, with the dollar strengthening and commodities as a whole selling off. Long liquidation and profit-taking were cited, with sell stops accelerating the moves lower. August gold, which overnight rose to $992.10 and appeared ready to re-challenge the closely watched $1,000 level, fell $18.80 to $965.60 an ounce on the Comex division of the New York Mercantile Exchange. “The dollar is really the key,” said Bill O’Neill, one of the principals with LOGIC Advisors. The dollar index had been sliding in recent weeks, underpinning gold. But all that changed Wednesday when the dollar index was up 1.069 points to 79.473 points shortly after the gold pit closed. “It’s a wholesale turnaround from what we’ve seen in the last week,” said a trader. “It’s probably profit-taking,” said the trader, but adding that some are also either shorting commodities or buying the dollar to take advantage of the short-term moves. The markets appear to have undergone a “consolidation day,” O’Neill said. “If there is significant follow-through tomorrow, then we’ll have to take a fresh look at it,” he said. “I suspect we could see a little more weakness in gold and silver and copper going forward, based on the fact they are in a little bit of a correction”.

The U.S. Dollar Index, a six-currency gauge of the greenback’s value, rose for the first time in a week as investors sought the currency’s refuge after equities fell. Gold typically moves in the opposite direction of the dollar index, which yesterday fell to the lowest since Dec. 18. “The market is certainly overdue for a downside correction,” Tom Pawlicki, an analyst at MF Global in Chicago, said today in a report. “Longer-term, we still see the market as being supported, with an advance above $1,000 an ounce possible over the next few weeks. Support will come from weakness in the dollar and from ongoing inflows of investment to commodities.” Gold “is being driven still by the dollar,” said Wolfgang Wrzesniok-Rossbach, the head of marketing and sales at Hanau, Germany-based Heraeus Metallhandels GmbH. “The dollar has gained back and that’s the reason why gold is off the highs. … Maybe there will be a little bit of consolidation” today, Wrzesniok-Rossbach said. “I don’t think we’ve seen the highs of the current rally” and gold will likely reach $1,000 “in a matter of days,” he said. Gold futures last topped $1,000 on Feb. 20. The metal still has gained 9.2 percent this year as governments around the world sell more bonds to combat the recession, weakening currencies and potentially sparking future inflation. “Gold has traditionally done well during periods of inflation and I believe we are entering a period of hyperinflation,” James Turk, the founder of GoldMoney.com, said today at a conference in London. “We are going to see clear signs of inflation by the end of the year. The Federal Reserve is trying to destroy the dollar to save the economy.”

Gold chops sideways consolidating recent rally

02 June 2009 – The COMEX August gold futures contract closed down 30 cents Monday at $980.00, trading between $974.10 and $990.20.

Gold futures ended near steady Monday as pressure from profit-taking overcame support from a weaker U.S. dollar. August gold fell 30 cents to settle at $980 an ounce on the Comex division of the New York Mercantile Exchange. The commodity is facing a band of resistance between $985 and $1,000, said Sterling Smith, vice president with FuturesOne. “We’re starting to see a little profit-taking here,” he said. Gold was consolidating above $970 but could begin moving higher in coming sessions, said Ralph Preston, senior market analyst with Heritage West Financial.

Gold prices were little changed Monday, despite a weaker dollar, as an improving economic outlook and a rally on Wall Street lured investors to more risky assets. On Monday, better-than-expected reports on manufacturing, construction and consumer spending provided more fodder for Wall Street’s three-month rally and sent stocks soaring. The day’s news renewed hopes that the recession will soon end and overshadowed General Motors Corp.’s filing for bankruptcy, which was expected. An increasing appetite for risk curbed demand for gold, which is considered a safe-haven asset. “Today you’ve seen money move into stocks,” said George Gero, vice president at RBC Capital Markets Global Futures in New York. “People are more willing to buy some risk than they were a week ago.” However, a weaker dollar continued to provide the precious metal with support. Investor sentiment on the economy has been growing more positive since early March as data suggests the recession is moderating and as the government floods the financial system with cash. On Monday, the dollar tumbled further against other major currencies. Investors use gold as a hedge against inflation, which can be sparked by a falling dollar.

Gold futures ended slightly lower Monday, but bullion remained within striking distance of $1,000 an ounce as currency weakness could still bolster the status of gold as a hedge against a falling U.S. dollar. Gold prices earlier reached their highest level since late February on the back of dollar weakness. Investors viewed gold as insurance against the falling value of their dollar-denominated portfolios. “Commodities generally are upbeat at the moment,” said Simon Weeks, director of precious metals at the Bank of Nova Scotia. “People are definitely buying hard assets as opposed to hard currencies.” Gold is an attractive investment for both bulls and bears on the economic outlook, he said. “I think the recent weakness of the dollar is driving the gold price right now,” said Caesar Bryan, who manages more than $450-million in assets at GAMCO Gold Fund in New York.

Plunging dollar propels gold higher.

29 May 2009 – Gold futures rallied Friday as speculative funds bought the metal while the U.S. dollar declined. “It’s almost a pure dollar play right now,” said Michael Gross, broker and futures analyst with OptionSellers.com. Funds were buying the metal and other commodities on continued dollar weakness and the potential for inflation, said Frank Lesh, broker and futures analyst with FuturePath Trading. “The funds are buyers; they’re buying commodities across the board,” he said. Stephen Platt, analyst with Archer Financial Services, added: “There’s movement of speculative money into commodities as a safe haven just like gold.” Historically, gold has tended to rise when the dollar falls as investors turn to the metal as an alternative currency, and vice-versa. Shortly after gold closed Friday, the ICE Futures U.S. dollar index was down more than 1.3%.

The dollar has weakened considerably since March as investors move out of cash holdings and into riskier assets like stocks on hopes for an economic recovery. Investors are also worried that the massive amounts of money the government has been pumping into the system could lead to inflation. That has been a boon for commodities like gold and oil. Oil prices continued their tear on the Nymex, rising above $66 a barrel for the first time in six months, as investors continued to bet on a rebound in demand. Prices are now nearly double the lows reached in March, when oil dropped below $35 a barrel. Other commodities, like grains, have been on an upswing too, benefiting from improving economic data and a brighter outlook on demand. “It seems like all the government spending and bailouts are finally starting to catch up and we’re seeing that spill over” into commodities markets, said Rob Kurzatkowski, futures analyst with OptionsXpress. “Commodities are definitely in vogue again.” Gold for August delivery jumped $17.10 to settle at $980.30 an ounce on the New York Mercantile Exchange. The precious metal shot up 10 percent in May, after two straight months of declines. Its year-to-date gain stands at 10.9 percent.

Silver futures gained 3% Friday, ending May with their biggest monthly gain in 22 years as inflation worries and hopes for an economic recovery boosted the metal. Gold rose to three-month highs as the dollar slipped. “What you may now be seeing is people think we are moving toward a recovery, and maybe we should be less pessimistic about the future of the metal, that may be factoring in the prices,” said Jeffery Christian, managing director of New York-based precious metals consultancy CPM Group. Silver, whose biggest single industrial use is in photography, is also used in medical applications and solar-energy devices. CPM’s Christian also pointed out that silver had declined sharply in the second half of last year, when the global economy was entering into a sharp downturn. Its prices had fallen more than the price of gold. “Silver is playing catch-up to some extent,” said Christian. The silver investment market is traditionally more volatile than gold, because the market is smaller than the gold market. “The gold market is more participated, involved more money, and more liquid, and it tends to see lower volatility,” said Christian. “In silver, you have few people with less money. It’s a much more illiquid market and prices are always more volatile than gold.”

Gold tops $960 fueled by weakening dollar

29 May 2009 – Gold rose, closing in New York at the highest price in three months, as a slumping dollar spurred demand for precious metals as a store of value. The dollar has dropped 4.8 percent this month against a basket of six major currencies, while gold has jumped 8.1 percent. The greenback fell as US equities and commodities climbed amid demand for higher-yielding assets. The slumping dollar “will only make gold more attractive if investors fear inflation,” John Reade, UBS AG’s head metals strategist in London, said in a report. Gold futures for August delivery gained $8 to $963.20 on the Comex division of the New York Mercantile Exchange, the highest settlement since February 25. Earlier, the metal reached $966.70, the highest intraday price in two months. Gold has gained 8.9 percent this year.

Gold prices have been rising steadily in recent weeks amid a falling dollar. Investors fear that the U.S. currency will continue to lose value as the government pumps more than $1.2 trillion into the financial system to energize the economy. This could lead to inflation down the road. “We think it’s going to be difficult for the Fed to sterilize all that money in the system and take it out of the system and that is going to be quite bullish for gold,” said Brian Hicks, co-manager of the global resources fund at U.S. Global Investors in San Antonio, Texas. “We’ll retest the $1,000 mark and more than likely breach that level in the near term.” Meanwhile, oil prices closed above $65 a barrel on the Nymex for the first time in six months as OPEC kept current production levels in place as expected. The Organization of Petroleum Exporting Countries has been slashing production this year to offset a drop in demand. In recent weeks, there have been signs that the cuts may be working. On Thursday, the government reported an unexpected drop in U.S. oil supplies last week, marking the third straight week that supplies have declined.

Fund buying boosted gold futures Thursday as rising oil prices and gains in the euro also supported the metal. “It looks like the funds are coming back to the market in a big way,” said Michael Gross, broker and futures analyst with OptionSellers.com. “Nobody wants to miss getting in at the beginning of a bull market.” A rally in the euro and crude, as well as technical trading, also boosted gold, said George Gero, vice president with RBC Capital Markets Global Futures. Technical traders started bidding gold up as it held above $945, said Pat Donnelly, senior broker with Peak Trading Group. With a close above $965 in the coming days, “we could be off to the races,” he said, adding that there isn’t resistance between that level and $1,000. The close above $960 paves the way for a test of record highs above $1,000 in the coming 14 trading days, said Ralph Preston, senior market analyst with Heritage West Financial.

100kg of gold, silver smuggled from Indian airport

25 May 2009 MUMBAI: A daring case of smuggling of a large quantity of gold and silver hit the Mumbai International Airport, India’s largest airport on Monday.

Airport officials three robbers decamped with about 100 kilograms of gold and silver from the Indian Airlines cargo terminal at Mumbai’s domestic airport.

Officials suspect the robbers had prior information about the cargo containing gold and silver bars.

Confirming the development, Manish Kalghati, General Manager, Corporate Communications & PR of GVK Infrastructure, said: “Yes, the theft took place around 11 am at the Indian Airlines cargo section.”

Kalghati, however, refused to provide confirmation on the quantity of gold and silver stolen. Officials said the robbers assaulted one of the guards who tried to raise an alarm.

What has surprised many is the manner in which the robbers entered the heavily guarded airport and carried out the heist. The domestic airport has been undergoing major renovation work. Meanwhile, a meeting has been called by the Indian Airlines and Air India officials to probe into the security breach.

Smuggling of gold has been a major issue in India’s bullion market. Last month, gold coins and silver bars were smuggled from a Hindu temple in southern India’s Kerala state.

Gold enjoys 4th-straight gain, ends week up 3%

25 May 2009,Gold climbed to a two-month high Friday, breaching $960 an ounce for the first time since late March as the dollar’s slide boosted buying of the metal as a currency hedge. Stronger oil prices, which hovered around their six-month peak, also supported gold. Bullion can be bought as a hedge against oil-led inflation, while rising crude prices can also boost interest in commodities as an asset class. Bullion is also technically well positioned to make further gains, according to analysts. Holdings of the largest gold-backed ETF, the SPDR Gold Trust, were unchanged for a sixth consecutive session Thursday. Spot gold touched a high of $961.30 an ounce, the loftiest price since March 20. U.S. gold futures for June delivery settled up $7.70 at $958.90 on the Comex division of the New York Mercantile Exchange. Simon Weeks, director of precious metals at Bank of Nova Scotia, said the majority of gold’s gains were dollar related, with investors “buying hard assets as opposed to hard currency”. “Physical (buying) has been okay, but I expect a big increase in the open interest on the long side on the Comex,” he added. Exchange data showed that Comex gold open interest rose sharply for a second straight day as of May 21, closing in on 400,000 lots.

The greenback fell Friday to the lowest level this year against the euro as worries increased that the U.S. could lose its triple-A credit rating. Standard & Poor’s Ratings Service Thursday warned Britain that it may lose its triple-A rating, triggering a drop in U.K. bonds and sparking global fears about sovereign credit ratings. In the U.S., 10-year Treasury bonds fell below a crucial level.

“A lot of it has to do with the dollar right now,” said Frank Cholly, senior market strategist with Lind-Waldock. “We’re seeing the dollar down for the fifth consecutive day.” The dollar index, on a decline since early March, has now given up roughly half of its gain since July 2008. “It’s looking like the long-term dollar downtrend is re-exerting itself,” said Peter Grant, senior metals analyst with USAGOLD – Centennial Precious Metals. And, he later added, the “classic hedge against a declining dollar and the likely inflation that comes from that is gold.” The metal is also drawing support from worries in the market that the rating for U.S. debt possibly could be cut in the future. “Things really aren’t improving despite the [stock] market’s desire to latch on to every little bit of positive news,” Grant said. “The reality is the economy is still struggling quite significantly. That was reflected in the FOMC minutes released this week from the April meeting.” Gold futures extended their recent rally Friday as the U.S. dollar remained on the defensive, enabling the metal to hit a roughly two-month high despite some of the profit-taking by longs ahead of a three-day U.S. Memorial Day weekend. Some fund buying was reported, and pre-holiday trading conditions were described as light.

Gold extends safe-haven rally to $950.

22 May 2009, Gold prices jumped Thursday, rising above $950 an ounce for the first time in two months, as the dollar lost more ground against other currencies. The precious metal has moved steadily higher in recent weeks amid weakness in the dollar. Prices are up 6.7 percent for the month. Gold benefits from a falling dollar because investors use the yellow metal as a hedge against inflation and a weak currency. On Wall Street, stocks sold off sharply on disappointing jobs data, which touched off fresh worries about the economy. The Dow Jones industrials plunged nearly 190 points in afternoon trading, while broader market indexes lost more than 2.3 percent. The steep selloff in stocks spurred some safe-haven buying of gold.

Stocks in Asia, Europe and the U.S. dropped after records showed that Federal Reserve policy makers saw risks last month to a U.S. economic recovery, and some Fed members noted the possible need for “a further increase in the total amount of purchases” of assets to spur an economic recovery, according to minutes of an April 28 to April 29 meeting released yesterday. Governors and district-bank presidents cut growth projections submitted to the meeting. “The fact equity markets appear to have stalled and inflation fears are on the increase should give gold increased upward momentum,” James Moore, an analyst at TheBullionDesk.com in London, wrote in a note today. The Fed’s consideration of enlarged asset purchases raises “concerns the global financial system could be flooded with more dollars,” said Pradeep Unni, an analyst at Richcomm Global Services DMCC in Dubai. “Fears of future inflation and ongoing financial uncertainty could support the metal.” Gold futures for June delivery gained $13.80 to $951.20 on the New York Mercantile Exchange’s Comex division. Earlier, the price reached $951.80, the highest for a most-active contract since March 23. Bullion for immediate delivery in London jumped $16.19 to $954.84.

Gold prices climb as dollar weak today.

19 May 2009,

Gold prices climbed on Tuesday as the dollar declined, hiking demand for bullion as an investment option after data showed housing starts and building permits dropped to record lows in April. “This morning report of a 12.8% decline in housing starts in April versus the prior month continues to suggest the bottom in housing still hasn’t been reached,” said Fred Dickson, chief market strategist, Davidson Companies. “Although the credit picture is improving and the job loss rate appears to be showing signs of slowing, housing remains the weak link in the economic picture. We continue to believe that an economic recovery probably won’t begin until the fourth quarter at the earliest,”

The U.S. Dollar Index, a basket of six major currencies including the euro and yen, has dropped 3.2 percent this month, enhancing the appeal of gold as an alternative investment. The index fell as much as 0.9 percent today. The dollar weakened against the euro after Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley sought to repay $45 billion in government bailout cash, according to people familiar with the matter. The banks need approval for the payments from the Federal Reserve. Gold futures for June delivery rose $5 to $926.70 on the New York Mercantile Exchange’s Comex division. The price has gained 4.8 percent this year. “It is growing concerns about the weaker dollar in future, given the increasing likelihood of an inflationary period to come, that is really driving gold higher,” said Patrick Chidley, an analyst at Barnard Jacobs Mellet USA LLC. “The time has arrived when more and more people are clamoring for inflation to make a real comeback,” Jon Nadler, a senior analyst at Kitco Inc. in Montreal, said today in a report. “Gold — of course I’m buying it,” said David Roche, the president of Independent Strategy, in a Bloomberg Television interview. He said the Standard & Poor’s 500 Index of equities may tumble as much as 30 percent in coming months.

Much of gold’s focus in recent sessions was reacting to moves either up or down in the stock market. In recent weeks, strength in equities had tended to cap gold’s upside due to reduced safe-haven demand, explained Carlos Sanchez, precious-metals analyst with CPM Group. But with equities mostly stable Tuesday, the market returned its attention to the dollar, said Charles Nedoss, senior account manager and metals analyst with Peak Trading Group. “For the first time in a while, you’re seeing gold take a look at a weaker dollar,”

“Gold still seems to be caught amidst heightened risk aversion and rising optimism in the global equity markets,” said Richcomm Global Services senior analyst Pradeep Unni. A better appetite for stocks is diverting some investment for bullion, analysts said. U.S. stocks turned positive on Tuesday after earlier losses. Weakness in the dollar, which is being dragged lower by renewed optimism over the global economy, is supporting gold, however. The precious metal is often bought as an alternative investment to the U.S. currency. Some investors have plugged into gold to hedge equally against potential for the positive mood to sour and inflationary problems posed by quantitative easing. “Broadly what we’ve seen is an increase in non-commercial long positions from tactical investors and broader currency related movements,” said Barclays Capital analyst Suki Cooper.

Gold dips; profit taking and sell stops cited

18 May 2009,

The COMEX June gold futures contract closed down $9.60 Monday at $921.70, trading between $919.00 and $934.10

Gold and silver futures lost ground Monday, largely in reaction to strength in equities. As the gold pit was closing, the Dow industrials were up by around 175 points, reducing some of the flight-to-safety buying in gold. Not only were equities up, but some traders appear to be “fleeing” from risk-aversion trades, said George Gero, vice president with RBC Capital Markets Global Futures. “They are looking for better opportunities in the stock market and better opportunities in currencies that yield more, even though they may be a little bit higher risk,” he said. Additionally, when gold was not able to maintain its recent upward momentum, some longs opted to book profits, added a trader. Some sell stops may have been triggered just under $928 in June gold, Gero said.

Gold futures fell Monday, briefly dropping below $920 an ounce as U.S. stocks extended gains following an upbeat reading on the housing market, reducing gold’s investment appeal as a safe asset. Gold is “once again characterized by more of an economic recovery anticipation motivation and less of a safe-haven-oriented one,” said Jon Nadler, senior analyst at Kitco Metals Inc. Gold for June delivery gave up $9.60, or 1%, to end at $921.70 on the Comex division of the New York Mercantile Exchange. The contract, which ended last week’s trading up 1.8%, had dropped to an intraday low of $919 during the session. Encouraged by low interest rates and by first-time buyers stepping back into the market, U.S. home builders’ spirits improved again in May, the National Association of Home Builders said. The group’s sentiment index recovered to the highest level since the collapse of Lehman Brothers last September.

Also contributing to perceptions about a prospective upturn in housing, Lowe’s Cos. reported a first-quarter profit that dropped a smaller-than-expected 22% as shares of the home-improvement retailer traded higher. In currency trading, the dollar rose against the Japanese yen but fell against the euro to start the trading week. A stronger dollar tends to put downward pressure on dollar-denominated gold prices.

Gold edges higher as stocks slide

13 May 2009, The COMEX June gold futures contract closed up $2.00 Wednesday at $925.90, trading between $917.80 and $931.40In gold trading Wednesday, prices ended slightly higher as the disappointing retail-sales data raised gold’s safe-haven appeal. U.S. retail sales dropped a seasonally adjusted 0.4% in April, the eighth decline in the past 10 months, the Commerce Department estimated Wednesday. Markets on average had expected a slight increase. The Commerce Department’s retail sales data measure revenues at stores selling durable and nondurable goods. Consumer spending accounts for about 70% of the U.S. economy and is a key element in economic growth. Retail sales had dropped 1.3% in March. “To date, we have assumed that the price of gold will see a short-term correction, due to weak demand from the jewelry industry and stagnating investment demand,” said analysts led by Barbara Lambrecht at Commerzbank, in a note. However, “should the U.S. dollar weaken further, this correction may not occur,” they added.

Gold futures settled marginally higher on some safe-haven buying as equities declined. Follow-up buying from Tuesday’s gains helped the metal, said Pat Donnelly, senior broker at Peak Trading Group. June gold rose $2 to settle at $925.90 on the Comex division of the New York Mercantile Exchange. “More new fund investors [are] driven by currency volatility and stock market volatility,” said George Gero, vice president with RBC Capital Markets Global Futures. The increased fund buying as well as rising moving averages, open interest and volume are likely to increase volatility in the metal, he said. Lower equities pressured silver despite gold’s rise because of silver’s industrial demand, said Sterling Smith, vice president with FuturesOne. Silver is more widely used for industrial applications than is gold. Comex July silver dropped 19.5 cents to settle at $14.02 an ounce. Meanwhile, platinum-group metals declined as participants booked profits in quiet trading. “It’s really quiet out there,” a trader of these metals said.

Gold price climbs on weakening dollar and inflation concerns.

12 May 2009, Gold futures climbed to nearly $924 an ounce on Tuesday as a weaker U.S. dollar and pricier crude oil fueled demand for the precious metal as a hedge against additional drops in the greenback and steeper inflation. Economic data released earlier Tuesday showed the U.S. trade deficit increased 5.5% to $27.6 billion in March from $26.1 billion in February, the Commerce Department said. In Tuesday trade, crude-oil futures briefly topped $60 a barrel as data showed increased demand from China. “Natural gas and crude are also up a decent amount. It all fits in with the thought process of transfer of systemic financial risk. As an investor or a company, you need to hedge against inflation — or your ability to buy goods, so people are going for assets they know hold value,” said D.J. Beil, an equity strategist at Jefferies & Co. The entire commodities complex drew an early lift from news that China’s infrastructure and industrial development expanded more than 30% in the first four months of the year versus the same period in 2008, Beil said. “If I were China, I’d take every advantage in price weakness in commodities because I know demand in only going to increase,” the analyst said.

“The global recession and the U.S. recession probably is over this month, maybe next month,” Jan Loeys, the global head of market strategy at JPMorgan Chase & Co., said in a Bloomberg Television interview from Hong Kong. “Commodities, materials in particular, are going to be benefiting right now as investors start to get a bit worried about future inflation.” Gold futures for June delivery gained $10.40, or 1.1 percent, to $923.90 on the New York Mercantile Exchange’s Comex division. “Over the next year or so, we think we are going to be crossing $1,000, probably go ultimately to $1,200, $1,300 just for inflation hedging and lack of supply,” Loeys said. Gold touched a record $1,033.90 an ounce in New York in March 2008. Clients “are very worried about inflation in two, three years time,” Loeys said in the interview. “The buying we are seeing now in commodities is really hedging, hedging off the potential risk that we will see a spike in inflation.”.

Gold holds steady in narrow range-bound trading.

11 May 2009, Gold futures ended “lackluster” trading Monday slightly lower on pressure from a mildly higher U.S. dollar, but the metal did find some support from faltering equities. Sterling Smith, vice president with FuturesOne characterized gold’s trading as “lackluster,” noting the day’s high and low were within the previous session’s trading range. Pressure was coming from a stable U.S. dollar, said Michael Gross, broker and futures analyst with OptionSellers.com. Meanwhile, the metal was finding support from declines in equities and some other commodities, he said. “It’s range bound,” said Andrew Montano, director of precious metals. Lower oil prices also pressured the metal, Kitco’s analyst Jon Nadler said in a research note.

June gold fell $1.40, or 0.2%, to $913.50, after rising 3% last week. Gold had risen last week as the U.S. dollar moved lower and as investors bought the precious metal on worries that central banks’ effort to pump liquidity into the market could raise inflation in the long term. The greenback regained some strength Monday, with the dollar index up 0.1% at $82.692. A stronger dollar tends to push down dollar-denominated gold prices.

“This week’s trade in gold is expected to progress in a generally higher direction, with prices potentially reaching $935.80 an ounce,” MF Global’s Tom Pawlicki said today in a report. “Support will come from worries that inflationary pressures are growing, from increased tensions in northwestern Pakistan, and from Venezuela’s seizure of oil assets.” In Pakistan, the government said the army killed about 700 insurgents in the past two weeks in the northwest region, where Taliban militants asserted control earlier this year. The government said 20 soldiers died in the fighting. The casualty figures couldn’t be independently verified. Crude-oil futures, which jumped 10 percent last week, slid as much as 3.2 percent in New York. Oil fell after asset seizures in Venezuela, the biggest supplier to the Americas. On May 8, Venezuelan agencies completed a seizure of oil-services company assets as President Hugo Chavez said private companies were no longer needed in the country’s oilfields. “We’re going to bury capitalism in Venezuela,” he said. U.S. stocks retreated from a four-month high after the Standard & Poor’s 500 Index traded at the most expensive level in seven months. The S&P tumbled as much as 2.2 percent before paring losses.

Gold chops sideways

08 May 2009, Gold futures finished near steady Friday, after paring investor-led losses from stronger equities and profit-taking. Investors were pulling safe-haven money out of gold and the U.S. dollar as stocks gained, said Michael Gross, broker and futures analyst with OptionSellers.com. But participants were wary of selling gold too much because of the lower dollar, and the metal was also getting support from inflation concerns, he said. Before gold steadied toward the close of its floor trading session, it had fallen as far as $905.50 as higher equities and stronger-than-expected payrolls numbers prompted gold market participants to book profits, said Charles Nedoss, senior account manager and metals analyst with Peak Trading Group.

For the week, gold rose 3%. In Friday trading, June gold slid 60 cents to end at $914.90 on the Comex division of the New York Mercantile Exchange. Gold rose for the week as investors bought the precious metal on worries that central banks’ effort to pump liquidity into the market could raise inflation in the long term. The European Central Bank on Thursday cut its benchmark interest rate to a record low of 1%. It also said it may offer banks longer-term loans to stem the region’s economic recession. The Bank of England surprisingly increased a bond-purchasing program. Having cut their key rates to close to zero, the Bank of England, U.S. Federal Reserve and Bank of Japan are now buying bonds, essentially printing money to reflate their economies in a policy known as quantitative easing. U.S. nonfarm payrolls fell by 539,000 last month, the Labor Department reported. Analysts on average had expected a decline of about 600,000. The unemployment rate rose to a 26-year high of 8.9%, in line with expectations. April’s loss of 539,000 jobs was the smallest decline since October’s 380,000. “The jobs data can be filed under the category ‘less bad,’ which is the theme permeating the markets,” said Brian Kelly, chief executive officer of Kanundrum Research, a commodities and macroeconomic research firm. The April jobs report reflected an easing in the pace of massive job destruction from the previous five months. Since the recession began in December 2007, payrolls have fallen by 5.7 million, or 4.1% of payrolls, the largest percentage decline since the 1958 recession.

“The unemployment numbers are still very bad, indicating weak economic prospects near term,” said Stephen Platt, a commodity analyst at Archer Financial Services Inc. in Chicago. “The market is still trying to set a little bit of a base here and may try to run higher if the deflation scenario is taken out. The economy is trying to turn a corner.” Gold probably may reach $950 to $960 in a “couple weeks,” Platt said. “The dollar is playing a role here,” he said. The U.S. currency tumbled to a six-week low against the euro following the jobless report as demand slipped for the safety of the greenback.

Gold extends gains for third day

07 May 2009, Gold futures climbed Wednesday, furthering the prior day’s strong gains, as the latest economic data pointed to signs of inflation ahead, bolstering the dollar-denominated precious metal’s appeal as a hedge. “We’re up today on renewed enthusiasm along with the equities market. With mortgages increasing and the positive ADP numbers … it could lead to inflation down the road,” said Rob Kurzatkowski, senior commodities analyst, OptionsExpress. In another signal that the pace of the economy’s decline is moderating, an industry report found private-sector employment fell by an estimated 491,000 jobs in April, the smallest decline in six months. Also helping boost sentiment, the Mortgage Bankers Association reported a 2% rise last week in the count of mortgage applications, adding to thoughts that the troubled housing market could be stabilizing. “Spot gold has been up for the last day or two on a weak dollar and concerns over the U.S. bank stress test results,” said George Gero, vice president, RBC Capital Markets Global Futures. Published reports varied on the amounts needed to comply with the government-administered test, with the New York Times reporting Bank of America Corp. would need more than $30 billion in additional capital.

Gold futures ticked higher Wednesday on follow-through in anticipation of U.S. bank stress-test results expected Thursday and in line with the idea that any economic improvement may lead to inflation down the road, analysts said. June gold rose $6.70 to $911 on the Comex division of the New York Mercantile Exchange. The move was on mostly sporadic but light volume, said Andrew Montano, director of precious metals at Scotia Mocatta. “There is nothing big out there moving the markets other than perhaps some people positioning themselves and trimming on the expectations of what we’re going to hear from these stress tests,” Montano said. Earlier in the day, a softer U.S. dollar lent some support to the metal. And some spillover strength may have come from strength in base metals, particularly copper after a strike in Chile, Montano said. Yet another supportive influence is the stronger tone in crude oil, said Stephen Platt, analyst with Archer Financial Services. As gold was closing, June crude was up $2.06 to $55.90 a barrel. “That seems to be feeding into the gold, touching off some light short covering,” Platt said. “The market’s inability to hold under $900 is also encouraging some light speculative interest.” Meanwhile, anticipation of possible eventual inflation could be prompting at least some gold buying, said Tom Pawlicki, analyst with MF Global. “Maybe because we’re in the early stages of an equity-market recovery and economic recovery, the market is focused on inflation,”

Gold bounds higher mid-day, gains $14.

05 May 2009, Concerns about the potential for inflation down the road, chart-based factors and a weaker U.S. dollar enabled gold and silver futures to rise sharply Monday. Analysts suggested the economic tone might be improving. And if this continues, they explained, it means price pressures might increase down the road, leading to some buying of gold since the metal is often bought as an inflation hedge. “We’re seeing more indications of perhaps a bottoming in the economy,” said Bill O’Neill, one of the principals with LOGIC Advisors.

“So there is an increasing – and it will continue to increase – concern surrounding inflation potential.” U.S. data showed March construction spending rose for the first time in six months and April pending-home sales rose 3.2%. And, O’Neill added, Chinese data has shown improvement lately, with the country’s Purchasing Managers Index back above the key 50 level. “People still want to be in the precious-metals arena,” said John Person, president of NationalFutures.com, also citing economic recovery and potential inflation as supportive catalysts.

“The gold story isn’t going away.” Some of the buying was said to be technical in nature, particularly as certain chart points were hit on a day when markets overall were quieter than usual due to holidays in London and Tokyo. The metal has been range trading for the last six weeks or so, but dips to $880-$890 have tended to attract buying, Person said. The June futures have held within a half dollar of $880 three times now since April 21, most recently on both Thursday and Friday. A trader reported a couple large chunks of volume during the morning, when prices surged.

Another suggested chart-based buying may have occurred, with stops triggered in quiet trading conditions. June gold topped the 20-day moving average that stood around $891 late in the session and also got above the 100-day average of $897.70. The weaker dollar is yet another factor underpinning gold, O’Neill said. Shortly before the metal closed, the dollar index was down 0.583 point to 83.959.

Gold futures climbed above $900 an ounce on Monday as the U.S. dollar weakened following an upbeat U.S. home-sales report, boosting the metal’s investment appeal. June gold climbed for the first time in three sessions, up $14 to end at $902.20 on the Comex division of the New York Mercantile Exchange. “A lower dollar helped the yellow metal recover some lost value,” said Jon Nadler, senior analyst at Kitco Metals Inc. Investors were also awaiting banks’ stress-test results due out on Thursday, he added. The results of the government’s Supervisory Capital Assessment Program — otherwise known as the “stress test,” are scheduled to be released on Thursday. The original release date was Monday. Bank of America Corp. and Citigroup Inc. are working on plans to raise more than $10 billion each in capital after preliminary findings of the U.S. stress test on banks, according to media reports.

UBS foresees more credit-related provisions

ZURICH (AFP) – – Swiss banking giant UBS has warned it would have to

make more credit-related provisions in the coming quarters due to the

financial crisis, as it confirmed a two billion franc first quarter loss.

While market sentiments improved in the first three months of the year,trading in complex financial products remained illiquid, the bank said

in a statement detailing its first quarter losses, which are equivalent

to 1.32 billion euros or 1.77 billion dollars.

“The real economy has continued to deteriorate, and this is expected to have negative implications for credit-related provisioning in coming quarters,” said the bank.UBS had already indicated that it expected a two billion franc loss for the first quarter in April, when it also said it would slash 8,700 jobs to cut costs.

Swine flu scare boosts dollar, trims price of gold

28 April 2009, A stronger U.S. dollar could be having an impact on gold Monday afternoon, according to commodity strategists. They caution, however, that a shift in market sentiment could cause another move down for the precious metal. Concerns about the swine flu pandemic are causing investors to flee from stocks and into safe havens like the U.S. dollar and treasuries. However, gold has not yet benefited from the “safe haven play.” Although markets are waiting for more news on the U.S. bank stress tests and the U.S. auto industry, the main focus is on breaking news about the swine flu. The World Health Organization (WHO) is continuing to assess the global health threat, but has not issued any new warnings yet. The organization said it plans give the swine flu a higher pandemic alert level.

Some analysts said that the spread of the flu could push gold prices higher if the disease triggered a global panic. The deadly swine-flu outbreak, originated in Mexico, has fueled fears of a repeat of the SARS epidemic that had ravaged Asia. In Mexico, more than 1,641 people have contracted the swine flu and 103 people have died. “The swine-flu pandemic might be the one surprise event of 2009 that could engender a quick run into gold for the duration of the panic phase,” said Jon Nadler, senior analyst at Kitco Metals Inc. Gold ended higher Friday, marking its first week of gains in five, boosted by news that China has nearly doubled its gold reserves since 2003 to the world’s fifth largest. “The Chinese government’s decision further demonstrates the leadership it is increasingly taking and its public recognition of gold’s proven role as a store of value and portfolio diversifier,” said Aram Shishmanian, chief executive officer of the World Gold Council. “This news is also further evidence of the growing recognition of gold’s growing prominence in providing stability in the uncertain financial markets, not only as a reserve asset but in the investment markets also,” Shishmanian added.

Gold may rise to $2,000 an ounce by the end of next year, Philip Manduca, the head of investments at ECU Group, said today in a Bloomberg television interview. The market’s perception that the International Monetary Fund will sell gold has affected the metal’s price, Manduca said. “That has suppressed gold,” he said. “When gold sells off, look at it as a buy,” Manduca said. “The reasons to hold gold increase from here.” China, which has increased its gold reserves 76 percent since 2003 to 1,054 tons, will continue to add to its holdings, Manduca said. “It is a currency,” Manduca said. “In the world of devaluation and debasement, that is going to continue.” China held the world’s largest foreign-exchange reserves at $1.95 trillion on March 31, according to government data. “As world trade fails to pick up through 2010, gold will be the currency of choice for all of the emerging world,” he said. Speculation that an outbreak of swine flu will curb demand for raw materials didn’t directly affect gold prices, John Reade, UBS AG’s head metals strategist in London, said today in a report.

Gold futures fell slightly in technically oriented trading Monday, with pressure on other commodities and a higher U.S. dollar also weighing. June gold fell $5.90 to settle at $908.20 on the Comex division of the New York Mercantile Exchange. The metal failed at $920 resistance, with the day’s high just a shade lower at $919.70. “Clearly, the bears wanted to jump on it,” Sterling Smith, vice president with FuturesOne, said of the metal’s inability to clear the $920 hurdle. George Gero, vice president with RBC Capital Markets Global Futures, noted that floor trading was interrupted when a low-flying commercial airplane escorted by military jets sent workers — including traders at the New York Mercantile Exchange — worried about a repeat of the Sept. 11, 2001, terrorist attacks fleeing their offices in the New York City area. Fears quickly abated when it became clear it was part of a “photo op.”.

Gold climbs above $900 on fund buying, weak dollar.

* Gold jumps after beating technical resistance below $900

* Investor demand tested as ETF buying stalls

24 April 2009, Gold rallied to a three-week high above $900 an ounce Thursday on a combination of buying by commodities funds, technical strength and a lower dollar versus the euro.

A back-and-forth session on Wall Street and ongoing jitters over the health of the U.S. economy are enhancing the precious metal’s appeal as a haven from risk, while physical demand is picking up in major consumer India ahead of a key festival.

A weaker dollar versus the euro also helped to support bullion, analysts said, as a lower U.S. currency makes gold cheaper for holders of other currencies.

Buying from India ahead of the Akshaya Tritya festival on Monday, an auspicious time for gold buying, is also helping drive prices higher, analysts said.

Metals consultancy GFMS said in a closely watched report that platinum group metals will take little support from their supply and demand fundamentals this year, but could benefit from investment demand if gold climbs.

WEEKLY HIGHLIGHT GOLD NEWS

Economy damaged – Bank of Canada sets stage for dramatic intervention Recession is deeper and will last longer.

Gold surges above 905.00 as stocks give up early gains.

Gold pressures resistance at 899.50/900.00. Penetration would shift focus to 908.95 initially, but potential would be to 932.65/935.01.

Rise in jobless claims suggests that previous week’s surprise drop of 47k may have been Easter holiday distortion.

Interesting that gold remains buoyant, despite the anticipated higher open on Wall Street this morning.

Gold Gains as IMF signals a contracting Global Economy.

The COMEX June gold futures contract closed up $9.80 Wednesday at $892.50, trading between $882.80 and $894.80

24 April 2009 Gold futures rose on a lower U.S. dollar and skittishness in equities stemming from financial-sector concerns. June gold rose $9.80 to settle at $892.50 an ounce on the Comex division of the New York Mercantile Exchange. The safe-haven buying in gold was coming on bank worries, said George Gero, vice president with RBC Capital Markets Global Futures. “Everybody’s a little concerned about the stress-test results,” Gero said. “The financial fears have not gone away. The aversion to risk is still here.”

Gloomy earnings reports from Morgan Stanley and Boeing reinforced economic worries. Morgan Stanley reported its first-quarter results swung to a net loss to common shareholders of $190 million, or 57 cents a share. Meanwhile, Boeing Co. reported sharply lower first-quarter earnings and cut its forecast for the remainder of the year, citing global economic pressures on its commercial aviation business.

Gold and silver advanced on rising demand for a store of value after the International Monetary Fund projected the global economy to contract this year. The IMF forecast a 1.3 percent decline in the world economy, compared with a 0.5 percent expansion estimated in January, and said growth will be slower next year than previously expected. “What is supporting gold is the continued uncertainty in the global economy,” said John Gross, the president of J-E Gross & Co., a metals-industry consulting company.

“We are in the midst of a ‘sea change’ where gold is the safe haven for investors.” In the 16-nation euro region, there’s “significantly less risk of deflation” than in the U.S, the IMF said in the report. “The market is divided between those who see inflation, due to the massive infusion of liquidity into the financial system, versus those who expect a deflationary environment going forward,” said Gross, who has traded metals for more than three decades.

“I believe the market is in a consolidation phase, where it has been moving sideways over the past two weeks between $900 (resistance) and $865 (support),” Gross said. “If the $865 level fails to hold, the next level of support is $825. Conversely, if gold can get past $900 resistance, it may challenge the double top at $1,000.”

“I think physical demand has picked up a bit, perhaps from the Indian side,” said Adrian Koh, an analyst at Phillip Futures. “That’s probably why we saw a bit of a run up on gold prices over the past couple of days,” he said. Gold imports by India, the world’s largest consumer of the precious metal, are set to grow by a quarter in April from a year ago, the first rise since August, the head of metals trading firm MMTC Ltd said on Tuesday. This is in sharp contrast to February and March, when gold imports dropped to almost zero.

Still, the market continues to watch for signs of trouble in the financial industry, which could once again enhance gold’s allure among investors. “Physical demand for gold remains from India and China, and SPDR, while it shed some 20 tonnes, remains at a historically high level, supported by long-term investors,” said Shuji Sugata, a manager at Mitsubishi Corp Futures & Securities. He sid that while gold may come under pressure if stock markets perform well, concerns over the health of U.S. banks would continue to lend support. “I think $850-$860 looks firm,” Sugata said.

Gold as a Savings Instrument – Not an Investment

“Gold markets are much lower as the stock markets are moving higher again,”

With the cries of global economic collapse on the wane and a low inflation scenario gold as an investment hedge does not make sense. However gold as a savings vehicle does make sense at this time. Gold is the ultimate currency for ensuring that both generational wealth and your current earnings maintain the value of the work and savvy investment decisions made by you and your ancestors is not slowly or in the catastrophic economic collapse scenario quickly eroded away.

Gold is money. Real money, tangible money unlike the fiat paper currencies that fluctuate with political whims and agreements on their value that can be altered by board room shennagins or Oval Office decisions that are beyond logical comprehension. Gold is money not an investment. It must be analyzed as money and to do this it must be compared to other currencies such as the US Dollar.

Is the value of gold going up or is the agreed upon value of currencies going down. Currencies around the globe are depreciating. The currencies must depreciate becuase one must remember that the value of assets is driven by the ultimate law of supply and demand. One can analyze charts until their eyes turn red and bleed a river down their cheeks as Fibonacci rolls over in his grave , however the natural law that governs all asset value is supply and demand. Look no further than the precipitous decline in the value of housing (another asset that should not be considered an investment) supply even outstripped a demand that was inflated by Dr. Doublespeak Greenspan and his boy wonder protege C-130 Ben (helicopters did not do the job for Ben he has upgraded to a C-130). Printing more money increases the supply and the fundamental law of markets (i.e. supply and demand) will eventually correct the value of the money regardless of the latest press release from the White House.

Gold is not really appreciating the other currencies are depreciating. Gold is money like the other fiat currencies but it is clear that gold has and always will hold it’s value because it has a tangibility that is agreed upon around the globe.

You can either save money or spend it. Saving money is a good thing in fact Bama Booma has recently implored Americans to save. It is wise to save gold in order to build-up your savings. This strategy continues to make good sense. So save gold; don’t view it to be an investment. Gold is money.